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Thomas Ahlström September 2014
• Creating the right preconditions for family company survival
• Preparing the Next Generation
Governance and Education
Generation Survival percentage
2nd 30
3rd 10-15
4th 3-5
5th 1-2
6th <0,5
Survival rates of family companies (world wide)
The stakeholders
shareholders debt providers employees pressure
groups
The shareholder – the most important stakeholder
Family Private Institution Activist Hedge Fund Raider
The family shareholder- The Superstakeholder
“In a listed, or a privately held company, there is always a possibility to exit, one way or the other, whereas the fundamental idea about family ownership - in its purest form - is to keep the company, own it as a going concern, and pass it on to the next generation”.
The ”Golden Cage”
I can’t eat my cake!
How does this effect governance?
If you can’t (or are not supposed to) vote with your feet – you probably want to exercise influence over the company, and ideally, in a much more rigourous way than the average shareholder in the average company
Owner – management interest alignment?
Governance models
Family assembly - Family council
Annual General Meeting
Single family Multiple families 1-2 generations Several
generations
Complexity³
Holding company – Supervisory board
Generation Persons Year of birth
4. 50 1930 - 1960
5. 147 1951 - 2002
6. 137 1980 - 2014
7. 6 2008 - 2014340
Big Family - Big Challenges
The Ahlström family - direct involvement
• Some 340 family members including children and in-laws
• Widely spread share ownership, 230+ family shareholders
• The fifth generation has taken over at board level
• 13 family members serve on 6 different boards, some on 2 boards
• 6 family members are nomination board – or committee members
• 14 family members serve on the holding company supervisory board
• 3 family members are employed in two different companies
About 30 persons
How do you secure a generation shift
• Trust or foundation
• Family governance
• Traditions, mindset, education, agreed principles
• Controlled shift of power
At what point do you engagethe next generation?
Early!
Education
18 30 Age
General Education Specific Education
”Equal opportunities” ”Based on track record and potential”
Courses
Finance for family business
Ahlström Business Academy I
Summer Camp
Strategic thinking - Insead
Leadership today - MIT
12
External – private economy
Ahlström Business Academy II
External evaluation Mentoring
Ahlström Business Academy III
Investor Day
Factory visits
Other external
Family business - IMD
How to get the Family Governance Working - our case
1991 First session, Professor John Davies, Harvard 1994 Second session1995 First Family Document 1996 Third session, Professors A. Lank & F. Neubauer, IMD,
Switzerland1998 Family Document 2nd edition ”Family Values and Policies”2002 Family Document 3rd edition
Governance & the Family Council
Family
General Meeting
Family Council
Family Assembly
Board
Mgmt
Mandate?
Why do Family Councils fail?
• The Family Council is a ”fair weather” institution
• The power structure of the Family Council is assymetric in relation to the Companies Act, and Articles of Association
• It does generally not take into account share based voting rights
• It is distant from the real corporate world
Back to the drawing board....
2010 Dr. Annelie Karlsson
2011 Fine tuning of the governance mode
2012-14 Changing the corporate structure
Antti Ahlström Perilliset Holding
Diffuion
Ahlström CapitalPrivate equity,
industrial investments, real estate, forestry,
listed shares, cleantech
Ahlstrom plc
Fiber Technology
Ownership Structure 2014
Munksjö plc
Specialty Paper
Ahlström Family 230 shareholders
OWNERSHIP ISSUES
OPERATIONAL ISSUES
Simplyfing a complex world
Social Capital
Intellectual Capital
Trust and Respect Economic CapitalVision, Mission,
Owner Strategy
Holding Company Operating Company
”And they lived happily ever after”
Thomas Ahlström
